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Unemployment Rate

The unemployment rate measures the percentage of the total civilian labor force that are currently unemployed. The formula for the unemployment rate is given by

The civilian labor force consists of all civilians (non‐military personnel), 16 years of age or older, who are willing to work and are not incarcerated. The number of people unemployed is determined according to certain criteria. In the U.S., an unemployed person is a member of the civilian labor force who is currently available for work and who has worked less than one hour per week for pay or profit. Furthermore, an unemployed worker must have been actively searching for work during the past month. Workers who are not actively searching for work, referred to as discouraged workers, are not considered a part of the civilian labor force and therefore are not counted among the unemployed.

Frictional unemployment. Frictional unemployment is the term used to describe unemployment that results from difficulties in matching qualified workers with new jobs. Many qualified workers seeking work are not able to find new jobs right away, usually because of a lack of complete information about new job openings. While it is likely that qualified workers will soon be matched with new jobs, these workers are considered frictionally unemployed during the time that they spend searching for their new jobs.

Structural unemployment. Structural unemployment results from structural changes in the economy that cause workers to lose jobs. The same structural changes also prevent these workers from obtaining new jobs. Structurally unemployed workers are not qualified for the new job openings that are available, mainly because they lack the education or training needed for the new jobs. Consequently, the structurally unemployed tend to be out of work for long periods of time, usually until they learn the skills needed for the new jobs or until they decide to relocate.